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Supreme Court Announces “Wipe-Out” of Yard-Man Presumption in Advance of Storm

With storm clouds threatening in the northeast, the Supreme Court cast a ray of sunlight for employers today by rejecting the use of a problematic inference in adjudicating claims for retiree benefits brought pursuant to collective bargaining agreements.  For many years, the Sixth Circuit has been applying the so-called “Yard-Man” inference, named after the decision in 1983 in which it was first crafted.  Pursuant to this inference, a collective bargaining agreement with ambiguous terms regarding  the duration of a promise of retiree welfare benefits is presumed to  contractually “vest” the retirees in these benefits, such that they cannot be removed after the expiration of the agreement.  In a unanimous opinion, the Court held that the Yard-Man inference was inconsistent with the application of ordinary principles of contract law and that the inference improperly placed a thumb on the scale in favor of vested retiree rights.  In so holding, the Court vacated the Sixth Circuit’s opinion, which had upheld a finding for the retirees following a bench trial, and remanded the case for the Sixth Circuit to apply ordinary principles of contract law in the first instance.  The case is M&G Polymers USA, LLC v. Tackett, 2015 WL 303218 (U.S. Jan. 26, 2015).

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About this Author

Howard Shapiro, Employment Attorney, Proskauer Rose Law FIrm

Howard Shapiro is a Partner in the Employee Benefits, Executive Compensation & ERISA Litigation Practice Center, resident in the New Orleans office. He is a nationally known ERISA litigator, listed by The National Law Journal as one of the Top 40 Benefits Lawyers in the country in the category of litigators representing management. He is ranked in the first tier of ERISA litigators by Chambers USA, which commends him as “a top class national player” with an “excellent practice with both breadth and depth.” He has been listed in The Best Lawyers in America since 1997, where he is one of...

Joseph Clark, Labor Attorney, Proskauer Rose Law FIrm

Joseph E. Clark is an associate in the Labor & Employment Law Department and a member of the Employee Benefits & Executive Compensation Group where he focuses on complex employee benefits litigation.

Joe represents a diverse range of clients including financial service providers, Fortune 500 corporations, plan fiduciaries, and multiemployer funds in matters including government investigations, breach of fiduciary duty claims, cash balance plan conversions, denials of claims for benefits, and withdrawal liability and delinquent contribution claims. He was an integral member of the trial team for two recently tried ERISA lawsuits.